Production generally requires some production support from other producers. Materials, components and service products supporting the production of finished products are (to the extent feasible), purchased from local providers. We’re employed when we’re producing; we become familiar with the materials we’re forming, the tools we’re manipulating, and the processing methods we’re practicing. What’s the value of hands-on experience?

Our loss of jobs due to our trade deficit of goods is not limited to the great losses of well paying manufacturing jobs. Much of the vegetables, fruits and meats we consume are imported into the USA.

Imports of price supported products are restricted and our Department of Agriculture determines the USA’s subsidy of exported price supported products. Otherwise our trade deficit would be greater.
[If we were to adopt the transferable Import Certificates policy, the certificates serve as an indirect but effective subsidy of USA exports (at cost only to USA purchasers of imports). The government could reduce, (if not eliminate) the subsidy for USA exported price supported goods that’s currently paid by from our federal budget].

Increasing USA’s domestic production of goods introduces increased economies of scale. Increasing traffic upon common carriers’ infrastructures reduces the per unit overhead expense to each individual carrier. Increasing production of any goods, (but particularly manufactured goods) introduces decreased production costs per unit.

Productions for domestic use or for export are of equal economic benefit to the nation. USA’s annual trade deficit indicates the extent of foreign production benefits that we denied to ourselves. The production of foreign goods contributes nothing to USA’s economy.

All production supporting expenses are not entirely reflected within products’ prices if the producers were not charged the full cost of that support.

Industries or individual Producers frequently receive expert advice or research and development or use of expensive equipment at reduced or no cost. These are usually provided by non-profit organizations such as governments or universities. Although these costs are captured within the producing nations’ GDPs, they are not recognized as being derived from globally traded goods. To that extent the values of nations’ trade surpluses or deficits are understated.

Nations’ annual trade deficits are always immediately detrimental to their GDPs. Due to the trade deficits, those nations’ GDPs are less than otherwise.
If nations imported materials or tools to increase future production of goods or services, it is conceivable that they would eventually gain from the transactions. Unfortunately this is not usually the case with USA’s imports.

Saturday, November 24, 2012

It is not our global trade but our trade deficits’ that are a significant net detriment to our economy. Trade deficits’ are ALWAYS detrimental to their nations’ GDPs.

I’m a proponent of a proposal to reduce USA’s trade deficit of goods that was first introduced to the Senate in 2006. The market driven proposal does not favor or discriminate between foreign nations, or between manufactured, agricultural or any other industries’ products. It is self funding; eventually all net federal expenses are borne by U.S. purchasers of foreign goods.

The basic concept is exporters of USA goods may request to have their goods assessed and pay the federal fees.
The fees defray all direct net federal expenses due to this policy. Assessments exclude the values of specifically listed scarce or precious minerals integral to the assessed goods.
Exporters are motivated to acquire Import Certificates; (ICs) which are only issued to exporters for the assessed values of their goods leaving the USA.

Importers would be required to surrender ICs for the assessed value of their goods entering the USA. Surrendered certificates are cancelled.

These transferable Import Certificates are an indirect but effective subsidy of exported USA goods.

This market driven trade policy would significantly decrease USA’s trade deficit of goods and increase the aggregate sum of USA’s imports plus exports and our GDP more than otherwise. The increased domestic production would be reflected within an increasing median wage.

Wage earning families benefit from cheaper imported goods but every day of every year they’re dependent upon their U.S. wages. Regardless of how small the additions to imports’ prices due to Import Certificates, (unlike tariffs) USA’s assessed imports could never exceed that of our exports. USA consumers will be able to purchase cheap, (but not the absolute cheapest) imported goods. We cannot afford the absolute cheapest.

Google: “wikipedia, import certificates “.

Refer to the blog “Nations’ trade deficits are always immediately detrimental to their GDPs”.